This document is a project report on ratio analysis conducted at Shri Govardhansinghji Raghuvanshi Co-op Bank Ltd. The report includes an introduction to ratio analysis, its objectives and uses. It discusses the different types of ratios including liquidity, activity, leverage and profitability ratios. The report also outlines some limitations of ratio analysis. The project was conducted by Yash D. Pardeshi, a BBA student, under the guidance of their professor Mr. Sufiyan Bagwan for partial fulfillment of their BBA degree.

1. A PROJECT REPORT
ON
“RATIO ANALYSIS”
AT
SHRI GOVARDHANSINGHJI RAGHUVANSHI CO-OP BANK LTD.
Submitted to
KBC North Maharashtra University Jalgaon
Under The Guidance Of
Mr.Sufiyan M Bagwan
For the Partial Fulfillment of the Requirement for
the Award of the
Bachelor of Business Administration
(Finance)
Submitted By:
Mr.Yash D. Pardeshi
RCPATELEDUCATIONALTRUST
R. C. Patel Institute of Management Research & Development Shirpur
Academic Year 2022-2023

2. ACKNOWLEDGEMENT
First of all, I would like to thank my project guide MR. SUFIYAN BAGWAN SIR for his
guidance through the whole period. This project would not have been possible without his
support. Secondly, I would like to thank SHRI GOVARDHANSINGHJI RAGHUVANSHI
CO-OP BANK LTD for providing all necessary data and material support during my
internship period.
My gratitude also goes to all officers and staff of SHRI GOVARDHANSINGHJI
RAGHUVANSHI CO-OP BANK for their continuance guidance throughout my internship.
I am greatly indebted to SUFYAN BAGWAN SIR for giving me an opportunity to develop this
project and for his timely help rendered during the project and making me available all kind of
resources with kind attention to success of this project.

3. DECLARATION
I, YASH D. PARDESHI a third year BBA student of Institute of Management Research &
Development, have given original data and information to the best of my knowledge in the
project report titled “RATIO ANALYSIS” was done by me under guidance of Mr.SUFIYAN
BAGWAN SIR (UG Finance BBA Program), Institute of Management Research
&Development and Mr. RAVINDRA RAGHUWANSHI (Manager), SHRI
GOVARDHANSINGHJI RAGHUVANSHI CO-OP BANK I also agree in principle not to
share them it all information with any other person outside the organization and will not submit
the project report to any other university.

4. I certify that this project done by MR. PRATHAMESH VIVEK SHAHA,
student of TY OF BACHEOLAR of BUSINESS ADMINISTRATION , RCPET’s
Institute of Management Research and Development , shirpur under
my guidance.

5. CONTENTS
CHAPTER
NO.
Particulars PAGE NO.
1 INTRODUCTION 1-23
2 INDUSTRY AND COMPANYPROFILE 24-44
3 RESEARCH DESIGN 45-47
4 ANALYSIS AND INTREPRETATION 48-71
5 FINDING , SUGGESTIONS AND
CONCLUSION
72-74
6 BIBLIOGRAPHY 75
7 ANNEXURE 76-80

7. INTRODUCTION
What Is Ratio Analysis?
Ratio analysis is a quantitative method of gaining insight into a company's liquidity,
operational efficiency, and profitability by studying its financial statements such as
the balance sheet and income statement. Ratio analysis is a cornerstone
of fundamental equity analysis.
WHAT DOES RATIO ANALYSIS TELLS YOU?
Investors and analysts employ ratio analysis to evaluate the financial health of
companies by scrutinizing past and current financial statements. Comparative data
can demonstrate how a company is performing over time and can be used to
estimate likely future performance. This data can also compare a company's
financial standing with industry averages while measuring how a company stacks up
against others within the same sector.
Investors can use ratio analysis easily, and every figure needed to calculate the
ratios is found on a company's financial statements.

8. OBJECTIVES OF RATIO ANALYSIS:
It evaluates the overall efficiency of the business entity. Ratio analysis is an
effective instrument which, when properly used, is useful to assess important
characteristics of business liquidity, solvency, profitability. A critical study of
these aspects may enable conclusions relating to capabilities of business.
Specific objectives:
1. Simplify accounting information.
2. Determine liquidity or Short-term solvency and Long-term solvency. Short-term
solvency is the ability of the enterprise to meet its short-term financial obligations.
Whereas, Long-term solvency is the ability of the enterprise to pay its long-term
liabilities of the business.
3. Assess the operating efficiency of the business.
4. Analyze the profitability of the business.
5. Help in comparative analysis, i.e. inter-firm and intra-firm comparisons.
Ratio Analysis Over Time
A company can perform ratio analysis over time to get a better understanding of
the trajectory of its company. Instead of being focused on where it is today, the
company is more interested doing this type of analysis is more interested in how the
company has performed over time, what changes have worked, and what risks still
exist looking to the future. Performing ratio analysis is a central part in forming long-
term decisions and strategic planning.
To perform ratio analysis over time, a company selects a single financial ratio, then
calculates that ratio on a fixed cadence (i.e. calculating its quick ratio every month).
Be mindful of seasonality and how temporarily fluctuations in account balances may
impact month-over-month ratio calculations. Then, a company analyzes how the ratio
has changed over time (whether it is improving, the rate at which it is changing, and
whether the company wanted the ratio to change over time).

9. What Are the Uses of Ratio Analysis?
Ratio analysis serves three main uses. First, ratio analysis can be
performed to track changes to a company over time to better understand
the trajectory of operations. Second, ratio analysis can be performed to
compare results with other similar companies to see how the company is
doing compared to competitors. Third, ratio analysis can be performed to
strive for specific internally-set or externally-set benchmarks.
Why Is Ratio Analysis Important?
Ratio analysis is important because it may portray a more accurate
representation of the state of operations for a company. Consider a
company that made $1 billion of revenue last quarter. Though this seems
ideal, the company might have had a negative gross profit margin, a
decrease in liquidity ratio metrics, and lower earnings compared to equity
than in prior periods. Static numbers on their own may not fully explain
how a company is performing.

10. INTERNAL AND EXTERNAL USERS:
 Internal users refer to managers who use accounting
information in making decisions relatedto the company’s
operations.
 External users, on the other hand, are not involved in the
operations of the company but hold some financial interest,
the external users may be classified further into users with
direct financial interest- owners, investors, creditors and users
with indirect financial interest- government, employees,
customers and the others.
Advantages Of Ratio Analysis
Ratio analysis plays an important role in analyzing a company’s financial
performance. Therefore, the advantages of ratio analysis are:
 Useful tools for analysis for Financial Statements
 Simplifies accounting data
 Helpful in assessing the operating efficiency of business
 Useful for forecasting
 Useful in locating the weak areas
 Useful in inter-firm and intra-firm comparison

11. What are the limitations of ratio analysis?
Some of the most important limitations of ratio analysis include:
 Historical Information: Information used in the analysis is based on real
past results that are released by the company. Therefore, ratio analysis
metrics do not necessarily represent future company performance.
 Inflationary effects: Financial statements are released periodically and,
therefore, there are time differences between each release. If inflation has
occurred in between periods, then real prices are not reflected in the
financial statements. Thus, the numbers across different periods are not
comparable until they are adjusted for inflation.
 Changes in accounting policies: If the company has changed its
accounting policies and procedures, this may significantly affect financial
reporting. In this case, the key financial metrics utilized in ratio analysis are
altered, and the financial results recorded after the change are not
comparable to the results recorded before the change. It is up to the
analyst to be up to date with changes to accounting policies. Changes
made are generally found in the notes to the financial statements section.
 Operational changes: A company may significantly change its operational
structure, anything from their supply chain strategy to the product that they
are selling. When significant operational changes occur, the comparison of
financial metrics before and after the operational change may lead to
misleading conclusions about the company’s performance and future
prospects.
 Seasonal effects: An analyst should be aware of seasonal factors that
could potentially result in limitations of ratio analysis. The inability to adjust
the ratio analysis to the seasonality effects may lead to false interpretations
of the results from the analysis.

12.  Manipulation of financial statements: Ratio analysis is based on
information that is reported by the company in its financial statements. This
information may be manipulated by the company’s management to report a
better result than its actual performance. Hence, ratio analysis may not
accurately reflect the true nature of the business, as the misrepresentation
of information is not detected by simple analysis. It is important that an
analyst is aware of these possible manipulations and always complete
extensive due diligence before reaching any conclusions.

14. 1. Liquidity Ratios
This type of ratio helps in measuring the ability of a company to take
care of its short-term debt obligations. A higher liquidity ratio
represents that the company is highly rich in cash.
The types of liquidity ratios are: –
1. Current Ratio: The current ratio is the ratio between the current
assets and current liabilities of a company. The current ratio is used to
indicate the liquidity of an organization in being able to meet its debt
obligations in the upcoming twelve months. A higher current ratio will
indicate that the organization is highly capable of repaying its short-
term debt obligations.
Current Ratio = Current Assets / Current Liabilities
2. Quick Ratio: The quick ratio is used to ascertain information
pertaining to the capability of a company in paying off its current
liabilities on an immediate basis.
The formula used for the calculation of a quick ratio is-

15. Quick Ratio = (Cash and Cash Equivalents + Marketable Securities +
Accounts Receivables) / Current Liabilities
2. Profitability Ratios
This type of ratio helps in measuring the ability of a company in
earning sufficient profits.
The types of profitability ratios are: –
1. Gross Profit Ratios: Gross profit ratios are calculated in order to
represent the operating profits of an organization after making
necessary adjustments pertaining to the COGS or cost of goods sold.
The formula used for the calculation of gross profit ratio is-
Gross Profit Ratio = (Gross Profit / Net Sales) * 100
2. Net Profit Ratio: Net profit ratios are calculated in order to
determine the overall profitability of an organization after reducing
both cash and non-cash expenditures.
The formula used for the calculation of net profit ratio is-
Net Profit Ratio = (Net Profit / Net Sales) * 100

16. 3. Operating Profit Ratio: Operating profit ratio is used to determine
the soundness of an organization and its financial ability to repay all
the short term and long term debt obligations.
The formula used for the calculation of operating profit ratio is-
Operating Profit Ratio = (Earnings Before Interest and Taxes / Net Sales) *
100
4. Return on Capital Employed (ROCE): Return on capital employed is
used to determine the profitability of an organization with respect to
the capital that is invested in the business.
The formula used for the calculation of ROCE is:
ROCE = Earnings Before Interest and Taxes / Capital Employed
3. Solvency Ratios
Solvency ratios can be defined as a type of ratio that is used to
evaluate whether a company is solvent and well capable of paying off
its debt obligations or not.
The types of solvency ratios are: –

17. 1. Debt Equity Ratio: The debt-equity ratio can be defined as a ratio
between total debt and shareholders fund. The debt-equity ratio is
used to calculate the leverage of an organization. An ideal debt-equity
ratio for an organization is 2:1.
The formula for debt-equity ratio is-
Debt Equity Ratio = Total Debts / Shareholders Fund
2. Interest Coverage Ratio: The interest coverage ratio is used to
determine the solvency of an organization in the nearing time as well
as how many times the profits earned by that very organization were
capable of absorbing its interest-related expenses.
The formula used for the calculation of interest coverage ratio is-
Interest Coverage Ratio = Earnings Before Interest and Taxes / Interest
Expense
4. Turnover Ratios
Turnover ratios are used to determine how efficiently the financial
assets and liabilities of an organization have been used for the
purpose of generating revenues.
The types of turnover ratios are: –

18. 1. Fixed Assets Turnover Ratios: Fixed assets turnover ratio is used to
determine the efficiency of an organization in utilizing its fixed assets
for the purpose of generating revenues.
The formula used for the determination of fixed assets turnover ratio
is-
Fixed Assets Turnover Ratio = Net Sales / Average Fixed Assets
2. Inventory Turnover Ratio: Inventory turnover ratio is used to
determine the speed of a company in converting its inventories into
sales.
The formula used for calculating inventory turnover ratio is-
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventories
3. Receivable Turnover Ratio: Receivable turnover ratio is used to
determine the efficiency of an organization in collecting or realizing its
account receivables.
The formula used for calculating the receivable turnover ratio is-
Receivables Turnover Ratio = Net Credit Sales / Average Receivables

19. 5. Earnings Ratios
Earnings ratio is used for the purpose of determining the returns that
an organization generates for its investors.
The types of earnings ratios are: –
1. Profit Earnings Ratio: P/E ratio indicates the profit earning capacity
of the company.
The formula used for the calculation of profit earnings ratio is:
Profit Earnings Ratio = Market Price per Share / Earnings per Share
2. Earnings per Share (EPS): EPS signifies the earnings of an equity
holder based on each share.
The formula used for EPS is:
EPS = (Net Income – Preferred Dividends) / (Weighted Average of
Outstanding Shares)

20. 20
CASH TO DEPOSIT RATIO:
It is measure of liquidity of banks. Banks should be able to meet the demands for
withdrawals by depositors as well as the demand for loans by its customers. It will be
able to meet these demand only when it has enough liquidity. The formula is cash at
bank+balances with the central bank+call money whole divided by total demand
deposits. It shows out of total demand deposits what proportion bank has in liquid
assets.
TABLE SHOWING THE CALCULATION OF CASHTO DEPOSIT RATIO
Cash Deposit Cash deposit ratio
2016-2017 23925642 226806251.63 10.54
2017-2018 19994490.52 230129363.60 8.68
2018-2019 41539177.52 249284137.33 16.66

21. 21
GRAPHICAL REPRESENTATION:
INTERPRETATION:
In FY 2018-19 Bank has the highest cash deposit ratio of 16.63%.
2016-2017 2017-2018 2018-2019
Cash 23925642 19994490.52 41539177.52
Deposit 226806251.6 230129363.6 249284137.3
Cash deposit ratio 10.54893409 8.68836997 16.66338579
0
50000000
100000000
150000000
200000000
250000000
300000000
Chart Title

22. 22
4.2.1 Return on Assets (ROA)
To calculate the banks return on assets, first, we find the net income, which can be found on
the bank's income statement. Next, determine the bank's assets (loans, securities, cash, etc.),
which can be found on the bank's balance sheet.
We calculate the Return on Asset as
ROA Return on Assets reflects the efficiency with which banks deploy their assets. The higher
the ROA, the most profitable is the bank.
TABLE SHOWING THE CALCULATION OF CASH TO DEPOSIT RATIO
YEAR NET PROFIT TOTAL ASSET ROA
2016-2017 3997722.03 319035202.35 1.25
2017-2018 4185568.41 326200417.57 1.28
2018-2019 4725722.83 350547399.21 1.34

23. 23
GRAPHICAL REPRESENTATION:
INTERPRETATION:
In every FY bank has the average is 1 percent.
0 100000000 200000000 300000000 400000000
2016-2017
2017-2018
2018-2019
3997722.03
4185568.41
4725722.83
319035202.4
326200417.6
350547399.2
1.25306612
1.283127852
1.3480981
ROA

24. 24

25. 25

26. 26

27. 27